Bitcoin, the world’s largest cryptocurrency, continued its upward rally and crossed the $34,000 mark over the weekend for the first time while Ether, another digital currency, also surged as the crypto rally continues.
After crossing $34,000 in the first week of January 2021, Bitcoin has more than tripled in value in the last three months alone as it was at $10,600 at the start of October 2020. Ether climbed as much as 22% to about $1,163 following a 30% advance on Sunday. According to Bloomberg’s composite of prices, Bitcoin held onto most of its weekend gains, dipping about 1.6% to $33,060 as of Monday morning in London.
“What we’re seeing is the standard moving of the crypto markets from Bitcoin to the Altcoin market led by Ether,” said Vijay Ayyar, head of business development with crypto exchange Luno in Singapore, according to Bloomberg. “This rotation usually happens when Bitcoin has a large rally and investors rotate profits” into other digital coins, he added.
In the middle of December, Bitcoin eclipsed its 2017 high and only hit $20,000 for the first time. Later on Christmas day, the cryptocurrency crossed the $25,000 mark. IOn Saturday, it crossed the $30,000 mark and traded as high as $34,182.75 on Sunday before dipping. As per market insiders, Bitcoin is set to continue its rally this year.
Bitcoin supporters argue that it’s muscled in on gold to protect against U.S. dollar weakness and inflation risk. This cites evidence of growing interest among institutional investors.
Sceptics view the cryptocurrencies’ upward rally over the past few months as a risky bubble fueled by investors chasing the momentum in crypto prices.
“The drivers of the crypto rally, if anything, are strengthening amid still low-interest rates, political uncertainty” and the prospect of more government stimulus, Julian Emanuel, chief equity and derivatives strategist at BTIG LLC, said in an email, according to Bloomberg. But volatility can work both to the upside “as well as to the downside,” he added.